Micron Stock Dips To A New 52-Week Low, Shares Decline 3%
Zacks Investment Research | Dec 23, 2018 09:11PM ET
Shares of Micron Technology (NASDAQ:MU) decreased more than 3% to close at $30.32 on Dec 21. Moreover, during the trading session, shares slipped to a 52-week low of $30.11.
This downside can be attributed to the company’s recently reported first-quarter fiscal 2019 results wherein earnings exceeded expectations but revenues missed the same. Moreover, inventory adjustments with several key customers compelled the company to issue a soft guidance for fiscal second quarter, which is an overhang on the stock.
Shares of Micron have shed 26.3% of its value year to date, comparing unfavorably with the S&P 500 index’s 9.7% drop.
What’s Hurting the Stock?
Micron is hit by excess inventory with customers in the cloud, graphics and enterprise market. Fall in demand from key customers like Intel (NASDAQ:INTC) and NVIDIA (NASDAQ:NVDA) is a major headwind for the company.
Intel’s CPU shortage coupled with weak demand for high-end smartphones is dragging down demand for NAND solutions. The company expects revenues in the graphics and datacenter market to be adversely impacted during a couple of more quarters by higher-than-normal inventories in gaming cards and the decline in cryptocurrency-related demand.
Such a scenario forced the company to lower its outlook for industry demand and supply of DRAM and NAND solutions and also announced a cut in its capital expenditure.
The company has trimmed its projection for NAND bit growth and reduced capital expenditure on NAND as it expects NAND industry supply growth to exceed industry demand in 2019.
Moreover, the U.S.-China trade war has made the demand environment highly uncertain for Micron.
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